The United States Trustee Program, which operates under the Department of Justice does the job of appointing the bankruptcy trustee. Duties of the bankruptcy trustee differ from case to case, depending upon the nature of the case. Similarly, the authority wielded by him, powers that are exercised, and the rights implemented thereof also differ.
Bankruptcy filings can be initiated for both consumers or individuals and also businesses. Both the types of cases require the expertise presiding of a well experienced trustee. Duties in bankruptcy cases and proceedings differ as per the type of bankruptcy.
Here the duties for individual or consumer bankruptcy filing have been discussed. Bankruptcy trustee fees, duties and some authority and responsibility in cases of business bankruptcies are a bit more complicated as compared to individual bankruptcies, but still significant similarities are observed.
Who is a Bankruptcy Trustee?
The proceedings of a bankruptcy are shocking and mortifying. Hence, a person who is of strong constitution, psychology, sound knowledge and a kind and caring temperament makes a good bankruptcy trustee. Fees of such a professional is decided by the Department of Justice and tend to differ from case to case.
It must be noted that the fees of the bankruptcy trustee, compensation and commission, is derived from several sources, such as the liquidation expenses and even the initial filing fee. Overall, a given trustee acts as a third-party in the proceedings, and prevents the creditors from harming that debtor's interests.
From the authority point of view, a bankruptcy trustee, is an officer of the Department of Justice, and is chosen from a panel of trustees who are permanently attached to the bankruptcy system of the district. Overall, the system has been created in such a manner that any said trustee can successfully maintain the proceedings of the case.
Bankruptcy Trustee Duties
As per the chapters the proceedings initiated by the bankruptcy trustees, duties executed by them and the decorum followed to complete the process significantly differs. Here, a brief elaboration on the different duties of bankruptcy trustees with respect to Chapter 7 and 13 have been given.
The first and the elementary duty of the bankruptcy trustee is of course, administrating and monitoring the assets of the debtor. When the case is filed and the trustee is appointed, the trustee takes the assets into his custody.
Then, he gives a 20 day notice to both the parties and in the due course, holds a bankruptcy trustee meeting, where he interacts with both creditors and debtors. In these meetings, claims, exemptions and other such things are sorted out by the three parties. At the end of 20 days, the non-exempt assets are liquidated by the trustee.
In case of chapter 7 bankruptcy, the trustee also serves notices and makes provisions for the domestic support obligation. In this procedure, the most important duty of the trustee is to ensure that the proceedings of the liquidation of assets and credit claim settlements take place properly and fairly.
The duties of bankruptcy trustees as per the chapter 13 bankruptcy laws are a bit different as compared to chapter 7. The first genuine difference is of course that the liquidation process is eliminated. The trustee conducts the aforementioned meeting with the creditors and debtors.
Secondly, the trustee acts as a financial advisory of the debtor and helps him in framing the new repayment plan. The last duty is that the trustee monitors the debtors financial activity till the debts are properly repaid and the said accounts are closed.
Among all the functions of the bankruptcy trustee, duties and responsibilities, ensuring integrity and honesty from all parties is the most important one. Hope that the elaboration on the responsibilities of the bankruptcy trustee, duties and functions is resourceful. That was some food for thought, till we meet again.